- Elizabeth

Whereas previous streams of e-waste originated from abroad, often imported under dubious conditions, the growing trend in China is domestically-generated e-waste, as NEEDigest has reported previously. This pattern matches with growing personal wealth and availability of cheap electronic goods and appliances: two factors combining to produce a culture of disposibility previously absent in China.

In the short-term, government policies may be exacerbating this trend. A small appliance-aimed “cash for clunkers”-type program launched in the fall has reportedly resulted in the disposal – and collection – of 2.39 million used home appliances, including televisions, PCs, refrigerators, washing machines, and air-conditioners within only a few months. But, as the UN report alludes and Shanghai Scrap’s Adam Minter has correctly pointed out, “China doesn’t yet have sufficient environmentally-secure capacity for recycling such a large quantity of used appliances.”

But, before we dive into that, let’s get back to the UN report.

Quantifying and qualifying the impact of e-waste on China

The report identifies China as the now second largest producer of e-waste. With an estimated 2.3 million tons of e-waste generated each year, China trails the US by only 0.7 million tons annually. These figures are, as admitted in the report, simply best guesses. Exact e-waste numbers are particularly hard to identify, given the extent of e-waste treatment that is conducted informally, and therefore outside official statistical channels.

The informal e-waste sector does not only weaken statistical efforts, though.

As UNEP’s Executive Director Achim Steiner warned in the report’s launch press conference “Developing countries will also face rising environmental damage and health problems if e-waste recycling is left to vagaries of informal sector.”

In China, most electronic waste management is conducted informally, by “trash armies” that manually collect, sort and recycle trash. Many electronics contain hazardous substances which, when treated in “backyard recycling” facilities with open sky incineration, cyanide leaching, and “cooking” of circuit boards, have deleterious effects on personal health, local soil and water supplies.

Pilot “take-back” programs that have been introduced by some Chinese cities, wherein individuals are paid to turn in their used e-waste to sanctioned collections sites, have faltered due to the fact that the assessment price for end-of-life goods is below the market value individuals can get from informal collectors. At the same time, state-of-the-art privately-run e-waste recycling facilities – where the government would like to see e-waste end up – are unable to compete without government subsidization, because the operational costs of their machinery exceeds the value of their output.

Despite these conditions, there is a silver lining yet. As Steiner pointed out earlier this week, boosting recycling rates can be a path to job growth, while cutting greenhouse gas emissions and conserving valuable resources. But only if manual processing is treated as a comparable advantage in China and other developing countries, and regulated in a way that minimizes damages to workers’ health and the local environment.

This goal, though not out of reach, is a formidable one for China.

Seeking an e-waste solution in China

China has well- established formal and informal e-waste sectors, often dependent upon one another. Viewed alone, this appears an encouraging condition for improving e-waste management. Furthermore, the presence of low cost labor in China is of great potential benefit, since much of e-waste handling – including processes that meet stringent EHS standards – is time-intensive.

However, as per the report’s findings, China’s formal sector interfaces very little with the informal sector. To make progress in e-waste management, China will need to seek an integrated approach, building processing capacity in the informal sector and incorporating it more meaningfully into the formal sector. This will require more than technology transfer and development –  which is often regarded as a cure-all in China – namely, market intervention and recognition of the informal sector.

Next, while the new report by and large promotes localization of e-waste management, it includes a specific recommendation to ship e-waste abroad for processing in cases where there is no local best available technologies (BAT) processes. NEEDigest has often heard this compelling solution echoed by recycling professionals. In China, however, the presence of considerable practical and political obstacles begs a degree of skepticism in the implementability of this recommendation.

Thus, while “close interaction and communication among the participants/stakeholders in the recycling chain” offers a right path towards achieving efficient and safe e-waste treatment globally, and in China, we should not soon expect to see the e-waste industry brought out from the shadows any time soon.

However, China’s limited electronic waste recycling facilities and swelling consumption patterns has rendered domestic containment of toxic trash a serious problem.

Like China, the US and Europe face this predicament, and for years have exported trash to developing countries in Asia and Africa at a lower cost and with fewer environmental safeguards. It is therefore somewhat unsurprising, but no less disheartening, to find out that China, too, is joining the ranks of countries opting to manage waste by having less developed countries manage it for them – often at considerable health and environmental risks.

The newest recipient country is not in Africa or Southeast Asia, as one might expect.

Rather, it appears that waste is being diverted to North Korea, China’s northeastern neighbor, whose western coast lies directly across from China’s prosperous coastal areas and many port towns. This revelation contradicts certain assumptions that North Korea, its economic development stunted due to a centrally planned economy and isolation from the outside world, was comparatively free from the industrial pollution that beleaguers many of its East and South Asian counterparts.

According to South Korean newspaper Dong-a Ilbo, North Korean entities responsible for generating foreign currency are importing and burying industrial waste from China. The trade is being conducted secretly, according to reports, and critics of the trade from North Korea’s scientific community have been silenced.

As per the Dong-a Ilbo:

Daily NK, a media outlet on North Korean affairs, quoted a source in the North’s South Hamkyong Province as saying, “The soil survey research center at Hamhung Institute of Technology released a research paper on its study of land pollution resulting from burial of industrial waste from China and a letter urging countermeasures to the Central Committee of the (North Korean) Workers’ Party. The institute was dismantled and senior officials and researchers were all purged.”

This is not the first instance where North Korea has been reported as soliciting other countries’ toxic waste.

In the mid-1990s, North Korea offered to dispose of the North Sea Brent Spar oil storage platform for Royal Dutch Shell, which the company had planned to dump in the deep Atlantic in 1995. The deal did not go through.

In 1997, Taiwan officials negotiated a cash-for-nuclear waste deal with the North Korean government. South Korea mounted pressure to cancel the deal, and in the end, Taiwan did not send the 60,000 barrels of toxic waste to North Korea.

Since then, North Korea has become more aggressive in its offerings.

Solicitations from the hermit country have been found on a Chinese-language website called “I DPRK” that promotes investment in North Korea. In the words of one of these ads North Korea seeks plastic and electronic waste that “can be processed in the port but which other countries and territories are restricted from dealing in.”

The website further stated “there are no limits, any business taking advantage of [North] Korea’s low labour costs for intensive processing is welcome.”

Just how much e-waste has been sent from China to North Korea is not known. The photo above shows North Korean workers unloading e-waste on the docks of Sinuiju, which lies across from the Chinese border town Dandong. Apart from the trade of waste, China is North Korea’s largest trading partner.

In 2008, bilateral trade reached $2.79 billion, though a big imbalance favoring North Korea exists. North Korea’s pronounced dependence on China is illustrated by data revealing much of the country’s food and nearly 90 percent of its energy supplies come from China. This imbalance is seen by some to be giving China added economic leverage with North Korea.

As China’s economy and personal wealth continue to grow, while North Korea remains economically stagnant, it is not difficult to imagine the streams of electronic waste coming from China widening further and wreaking more havoc on the land and people, ill-equipped to properly handle toxic substances, that come into contact with it.

Whether motivated by property values or public health, recent outcries have not been conducted in vain.

Citizen resistance has succeeded in blocking the government’s construction plans, confirmed when district Party secretary Tan Yinghua said in a meeting with local residents yesterday that the entire project would “start from the beginning.” The government pledged transparency and public engagement throughout all steps of the re-planning process, including the environmental assessment, feasibility study, and location decision, according to a report by state-run Xinhua media.

Both foreign and domestic media outlets credit this outcome to the public push back that began last month.

Having learned of plans to build the incinerator, over 1,000 residents gathered outside the Guangzhou Municipal Government building in late November. There, they shouted slogans and unfurled banners of opposition, and demanded the city’s deputy general secretary to resign. Scenes of the protest were broadcast on local television.

News of the government’s decision to redraw the project entirely marks a public victory and, to some, suggests a widening space for the public’s influence over local government in China.

However, not everyone thinks that the government should be labeled a bogeyman. An article in Nanfang Daily, known for its keen and at times critical reporting despite being a party-run newspaper, argues that though few wish for a waste incinerator, power plants, or other polluting facilities built close to their own home, socio-economic development and people’s livelihoods inevitably rely on them.

As China Environmental Law‘s Charlie McElwee  summarizes “how to resolve this contradiction is a test for the government, but also a test of the wisdom of the people.”

The article goes on to suggest that opposition resulting in movement of the facility to a less developed region where more vulnerable populations reside is analogous to the developed world’s transfer of pollution overseas.

Finally, the author concludes (and yours truly would argue) that responsibility lies with both the government and the people to adopt a coordinated, multi-stakeholder approach for managing waste and addressing pollution problems.

Given the journalist’s well-argued position, it was encouraging to find in yesterday’s news of the government’s concession a tandem commitment to introduce initiatives aimed at reducing source waste and require household sorting.

Beginning next year, the city plans to roll out a garbage classification pilot project, and has set a target recycling rate of 30 percent by 2012. Eventually, sorting will become mandatory and refusal to comply may result in fines.

As someone who would rather see a compost heap in every apartment complex than landfills or incinerators dotting urban perimeters, this program has lots of promising potential, and is a constructive reaction to recent unrest.

As the Nanfang journalist (who is not named in the article) suggests, it only seems natural that enhanced public participation in governance correlate with increased public responsibility.

One unfortunate biproduct of China’s informal waste management sector – which contains a vast network of recyclers who sort and process municipal solid waste – is that it has produced a tenuous connection among most urban residents between consumption and disposal. To many, the task of trash sorting belongs, simply, to “someone else.”

Though the local government’s responsiveness to citizen opposition is, in all regards, a breakthrough event, demanding individuals to do their part to address the problem and endeavoring to raise awareness about trash disposal represents a perhaps more critical step forward for governance in China. I hope more bottom-up efforts are met with well-considered top-down initiatives.

Beijing municipal officials recently announced plans to continue with seven incinerator projects in the Beijing area, despite protests of nearby residents.

As we have reported before, Beijing’s trash is growing at approximately 8% annually, though the city is capable of treating just over half of what it tosses. Currently, 90% of Beijing’s solid municipal waste is sent to area landfills.

Though source waste reduction, improved recycling programs and more active resident seperation are among the many options available for addressing the problem, local and central level officials have prioritized the building of more incineration plants as their preferred approach.

This stance, combined with a lack of regulatory oversight and monitoring necessary to ensure the plants’ safety and environmental standards, has stirred dissatisfaction among local residents, and prompted vocal protests unseen in years past.

Incinerators – Clean or Dirty? Friend or Foe?

The thought of burning trash hardly seems ecological or pleasant to the nose, and expert opinions vary as to whether they are part of a sustainable path of development.

That said, advanced facilities are capable of meeting even the most stringent emissions standards; contribute little apparent smell to the community in which they are located; and can even produce energy as a biproduct, making the plant a net negative energy consumer.

Plus, incinerators contribute to the mitigation of landfill methane gas, which has a global warming potential 25 times that of CO2.

Among the list of countries with advanced facilities in operation – which includes Austria, The Netherlands, Japan and France – is China. However, most facilities in China are not among the latest and greatest.

In Shenzhen, for example, though the Baoan incinerator produces almost no dioxin – the carcinogenic emission that often gives incinerators a bad name – it also costs ten times what incinerators across town cost to operate. Other, operationally cheaper plants, by contrast, can be smelled from a mile away and seen belching dark plumes of smoke into the air.

The topic at hand is not why have not China’s municipalities not set strict standards to mandate cleaner incinerators. Chinese cities such as Beijing and Shanghai have passed standards comparable with those in Europe. However, lacking enforcement and monitoring of operation in China has resulted in poorly performing incineration plants even in cities which have enacted strict local regulations.

Moreover, national standards permit dioxin levels ten times those permitted in the US by the Environmental Protection Agency. Foreign engineering firms cite China’s pollution-permissive legal framwork as their reason for not being more responsive to a surging demand for building incineration plants in China.

These factors combined have resulted in incineration plants which, in addition to posing an environmental threat, have also bred public distrust and resentment.

Public Outcry Becoming More Prevalent

As recently as a few years back, environmental justice was not something with which ordinary citizens normally got involved.

Whether because of higher income levels, property value concern, raised awareness, an amalgamation of these elements or something else altogether, China’s citizenry has become more vocal on environmental issues affecting local communities. Growing activism is especially apparent on the issue of incineration plants.

In the past two years, protests over planned incineration plants have broken out in major cities including Beijing, Shanghai, Suzhou, and Panyu. (in Guangdong Province). Each of these cities’ protests resulted in planned projects being halted or altogether abandoned. In Xiamen, rally cries against a planned chemical plant overturned the project.

Government, Backed Into a Corner, Pushes Back

Despite a measure of recent success of citizens in defeating incineration plant construction and expansion, the mechanism for democratic governance is far from fully developed in China. Though local governments can no longer ignore public sentiment completely, they have not demonstrated a willingness to redraw waste management initiatives.

Just last week, Beijing government officials announced intentions to continue with seven planned incineration plants, slated to be built in the city’s residential neighborhoods, as part of a plan to build nine incineration plants in the Beijing by 2015.

The announcement came in spite of renewed concerns over incineration plants in the last few months.

Chen Ling, vice-director of the Beijing municipal commission of administration, was quick to address community concerns by avowing that the plants would not pose a health risk.

But a marred track record to date may speak louder than Chen’s promises.

Beijing’s one existing incinerator plant, built in 2002, was found in 2008 to be burning, on a daily basis, four times its designed capacity, and pumping 40% of its methane emissions in to the air, rather than capturing them for energy.

Beijing’s latest act demonstrates that though a corner has not been fully turned in terms of government responsiveness to public sentiment, it can neither act unilaterally, particularly on issues that affect daily quality of life. If the last few years’ of growing activism are any indication of what is to come, it would seem that the recent announcement is not the final word.

If you like what you see here, check out TALKING TRASH: Beijing.

However, that soil is not uniform in content. The issue of quantifiable emissions reductions, central to continued bilateral discussions leading up to Copenhagen, is anything but homogeneously understood, as recent events demonstrate.

Senate Hearing on U.S.-China Cooperation on Climate Change

On the heels of Senate Foreign Relations Committee Chairman John Kerry’s visit to Beijing, which culminated in a vague-but-hopeful China-U.S. Clean Energy Initiatives Agreement, Foreign Relations Committee held a hearing in Washington on that topic.

Throughout the hearing, panelists stressed the importance of emissions reductions that are “measurable, reportable, and verifiable.”

However, Kerry and at least one panelist differed in their perspectives on China’s capacity to deliver such reductions.

Kerry heaped praise upon Chinese energy initiatives, saying:

“The Chinese are beginning to realize that addressing climate change and pursuing sustainable energy policies is very much in their own national interest” and “I believe … we are going to see very significant reductions from China.”

Council on Foreign Relations scholar Elizabeth Economy appeared less convinced.

Identifying the road to those measurable, reportable and verifiable (MRV) reductions as “a long term process” and highlighting  institutional limitations, Economy guessed that, with regard to achieving quantifiable emissions reductions commitment, “the best” the U.S. should expect is “a framework for an agreement moving forward on MRV.”

State Council Meeting

Next, a June 6 report from China Daily, China’s state-owned news outlet, referenced remarks made at a meeting of the State Council, China’s highest executive body. Journalist Fu Jing wrote:

“China will put in place carbon dioxide emissions targets for its economic and social development programs” and “may be considering national goals for carbon dioxide levels when it maps its 12th five-year national development plan.”

Though absent specific targets, the comment was significant. The five-year plan is China’s primary strategy for social and economic development and the dominant metric by which governance is measured. The 12th five-year plan will cover the years 2011-2015.

However, Director of the National Resource Defense Council’s China Environmental Law Project Alex Wang quickly suggested that something critical had been lost in translation.

Whereas the phrases “carbon dioxide emissions targets” and “national goals for carbon dioxide levels” used by the English-language China Daily suggest a possibility for baseline emissions reductions in China, the Chinese-language press announcement explicitly identified only “carbon dioxide intensity” (paifang qiangdu) as the target under consideration.

Carbon intensity refers to the amount of emissions per unit of GDP. As NEEDigest has pointed out before, reductions in carbon intensity would not a priori amount to reduced emissions. So long as China’s GDP grows, so, too, would emissions.

The clarification Wang makes is vital, as it demonstrates that China still does not intend to commit to emissions reductions.

In fact, speaking Thursday before reporters, Foreign Ministry Spokesman Qin Gang definitively stated China will not accept binding cuts in its greenhouse gas emissions, adding:

“Given that, it is natural for China to have some increase in its emissions, so it is not possible for China in that context to accept a binding or compulsory target.”

U.S.-China Talks on Climate Coordination

Qin’s comments come just after this week’s discussions between the U.S. and China on clean energy and climate issues.

A retinue of officials from the White House, Department of Energy, Environmental Protection Agency, and Treasury comprised the U.S. delegation to Beijing, which met with Vice Premier Li Keqiang and others.

For all the fanfare preceding and surrounding the talks, there was outward indication that no major breakthrough had occurred. More significantly, what exactly the U.S. expects when demanding China “to do more” may now be emerging, having undergone a possible change in theme as a result of the June 7-10 talks.

The latest remarks made by both Qin and U.S. climate change envoy Todd Stern indicate that the U.S. will not push for binding emissions targets from China.

After an interview with Stern, China Daily quoted the top U.S. climate negotiator as saying:

“We don’t expect China to take a national cap at this stage.”

That differs markedly from Stern’s tone in a speech last week before the Center for American Progress, a Washington, D.C., think tank, where he discussed his planned trip to Beijing.

Stern stated then that China needed to take actions “that they commit to internationally, that they quantify and that are ambitious enough to be broadly consistent with the lessons of science.”

Scientists and practitioners have noted that without greenhouse gas mitigation from the world’s top two emitters – China and the United States – the efforts by other countries will be inadequate to slow global warming and avert more serious future consequences.

A document guiding UN climate negotiations in Bonn in March highlighted “convergence” on the need for long-term emissions cuts across developing and developed countries, and specifically asked China to commit to binding targets.

Amassing all the parts from the past week, it appears that China is no more willing to commit to reductions than it indicated previously, while the U.S. may be backing away from this request altogether. If this is the case, the ground on which meaningful climate commitments may be achieved, despite the appearance of fertility, may not yield the favorable results hoped for by many.

Originally posted on SolveClimate.

If you like what you see here, check out Guardian Article on China Emissions Plan Amounts to Wishful Thinking.

China's Power Sector Investment

China’s largest electric transmission company has announced an ambitious plan to develop a national smart grid by 2020 that would help utilities and their customers transport and use energy more efficiently.

The sheer size of the project raises some intriguing questions. First, about whether China has the capital and technology for such an extensive upgrade. And second, whether the project could provide an opening for U.S.-China cooperation on technological improvements that could benefit both.

There’s little question that the grid upgrade is becoming a necessity for State Grid Corporation of China, which is responsible for delivering power to 80 percent of the population.

Repeated blackouts in China’s coastal metropolises caused by power shortages in recent years, plus pressure to expand electrification to the rural inland and the growth of wind farms, have prompted considerable government investment in supply-side electricity improvements.

Underscoring the current pressure on the Chinese government to address the issue of power equity, Ryan Hodum, a senior associate for clean energy consulting firm David Gardiner & Associates told NEEDigest that while it

“will be critical to develop a ‘clean energy backbone’ across China to deliver electrons derived from clean and efficienct sources,” the Chinese government also “need[s] to focus on rural electrification so that the country not only develops a Smart Grid but…also raises the level of access to energy.”

Private firms and provincial governments across northern and eastern China are already commissioning several 10-gigawatt wind and solar generation bases that will depend on an advanced grid to help China reach its target of 15% energy from renewables by 2020, not to mention the 35% goal SGCC expects to meet.

SGCC general manager Liu Zhenya said the smart grid project would get started this year with the development of technical standards.

Part of the physical foundation is already in the works, such the “West-East Electricity Transfer Project,” an initiative to build three East-West corridors totaling 20 GW in transmission capability. Since January, the State Grid has also been operating a 400 mile long, 1,000 kilovolt ultra-high voltage AC demonstration project, which allows heavy electricity flow with lower transmission loss. It plans break ground on three more UHV AC lines this year, and build roughly 11,000 miles of UHV AC lines by 2012.

More financial and technical details of the smart grid plan are expected to emerge over the next few weeks.

Meanwhile, questions remain about the source of the needed technology.

China’s Localization Push Poses a Challenge for Technology

Though the pilot UHV line was developed entirely in China, building out a smart grid in China will depend on importing key technologies, a fact that was not lost on the over 40 utility data management-related exhibitors that turned out to the third annual MeteringChina Conference, held in Beijing just days after the SGCC announcement.

Nevertheless, China may be as intent to develop domestic smart growth technologies as it has been in promoting a homegrown wind industry by mandating at least 70% domestically produced components in the construction of wind power plants. China Strategies president Louis Schwartz is confident that as with “just about every industry, [China’s] ultimate goal is localization.”

But localization will not come cheap.

Lu Qiang, an academic at the Chinese Academy of Sciences and professor at Tsinghua University, estimates that China will need to spend at least $147 billion yuan to build an international-level quality smart grid. Bloomberg reports suggested capital costs of $10 billion annually from 2011 to 2020, with a total project cost of $590 billion.

Partners in Smart Grid Exploration: China and the U.S.

For these and other reasons, it makes sense that the U.S. and China – which are simultaneously venturing into smart grid planning – should be considering smart grid cooperation.

China and the US face many similar challenges in their power delivery infrastructure.

Like the U.S., China must transmit power across great distances. Moreover, compared with some countries’ systems, which boast only 2-3% annual loss of generated power, China averages roughly 7% loss per year and U.S. losses have reached 9% in recent years.

The U.S. and China’s shared need to address geographically similar demand and excessive power loss explain why smart grid deployment has emerged as a key area for bilateral collaboration.

Four days after SGCC announced their smart grid plans, U.S. House Speaker Nancy Pelosi (D-Calif.) and Senate Foreign Relations Committee Chairman John Kerry (D-Mass.) held a Clean Energy Forum in Beijing. The group reached an agreement on joint clean energy action that included smart grid as one of the key areas for collaboration.

Specific to smart grid planning, the agreement called for knowledge and technology exchange between the two countries, and a sharing of demand side management tools.

On the topic of eliminating barriers, the framework called for a relaxation of import barriers in both countries on clean energy goods and services; lifting U.S. export controls on clean energy technologies, software and services stifling more robust joint research and development; and instituting a joint intellectual property protection program, backed by the full faith and credit of each government.

While the State Grid announcement and subsequent efforts to promote U.S.-China smart grid coordination are a promising first step towards building a smart grid in China, only time will tell whether China, and the U.S., will be able to sort out the extremely complicated nuts and bolts involved in such an initiative.

Originally posted on SolveClimate.

“We believe in the outstanding long-term prospects of the solar energy market in the United States” Suntech Chairman and CEO Zhengrong Shi said.

The Suntech announcement reflects the value of federal and state incentives for renewable energy. It also counters a favorite argument of climate action opponents on Capitol Hill that shifting the United States to a clean energy future will send U.S. jobs overseas. Suntech, the world’s largest solar energy company in terms of photovoltaic module production, said it could cut transport costs and emissions by building closer to its market. The cost of shipping heavy renewable units, combined with the fact that the U.S. and EU currently constitute the majority of clean tech demand, makes local manufacturing facilities a sensible strategy for long-term growth.

Political considerations were also not lost on the company. Appealing to both green jobs enthusiasts and those who perceive China as taking manufacturing jobs from the U.S, Shi said he is hopeful that “initiating manufacturing in the U.S. will drive further growth of green jobs.”

Suntech America President Roger Efird said as many as 1,000 jobs could be created through Suntech’s U.S. operations over the next few years. The company plans to settle on a location in the next six months.

“We are currently in discussion with the governors of three different states who have been recruiting us to build factories,” Efird has said.

In making the announcement this week, the company specifically identified that its decision would be based on “local manufacturing incentives” and “long-term policy commitments.”

National-level renewable electricity legislation is currently being considered in Congress, and 28 states have their own renewable portfolio standards in place that require utilities to generate a certain percentage of electricity from renewable sources.

In addition, the stimulus bill signed earlier this year provides federal level loan guarantees, grants, and a 30% renewable-investment tax credit to expand the development of renewables, plus state level incentive programs are being formulated to include more extensive measures – including tax holidays, loans and grants – aimed at attracting top companies. Some states, like California and Colorado, have committed to solar-specific subsidies for PV manufacturers.

Texas is considering solar financing legislation that would allocate $500 million for solar incentives. While residential and commercial users would be able to take advantage of rebates – in some cases more generous than those being offered under the California Solar Initiative – 70% of the dedicated funding would be earmarked for utility-scale applications. Franchise tax exemption for manufacturers, sellers, or installers of solar energy devices would put Texas-based companies capable of utility-scale applications at a distinct advantage.

Suntech is one of three major PV manufacturers worldwide that can handle utility-scale applications.

In addition to homing in on increasing state-level solar incentives, Suntech may also be reacting to Chinese government initiatives and guidance.

Late last month, Director Deputy-General Liu Hongkuang of China’s main economic and social policy making apparatus, the National Development and Reform Commission, made a speech before a conference of government officials and state-owned enterprises encouraging China’s energy industry to broaden overseas activities.

While Liu did not specifically single out the solar sector, he explicitly called on energy players to invest in manufacturing ventures overseas, strengthen resource cooperation, and invest in foreign energy infrastructure projects, according to a report by China Securities Journal.

The tone of his comments demonstrate a push to diversify China’s overseas energy activities away from primarily resource investing, in Africa and Australia for example, and towards more technologically advanced investment.

Just how much pressure from Beijing is behind Suntech’s overseas expansion, signaling coordination between central-level energy policy and China’s private industry, is unclear.

Chris Brown, a China Energy consultant with Guymard Consulting who has worked on solar initiatives in the southwestern U.S., believes

“there is likely some NDRC guidance” involved in Suntech’s decision, which is “part of a larger Beijing policy of making China a world renewable energy leader.”

While Suntech has emerged as something of a national champion in China in recent years, its status as a publicly owned, NYSE-listed company suggests it answers to shareholders before it does to Beijing.

The fact that Shi, a naturalized Australian citizen, has had his eye on building U.S. operations for almost three years is further evidence that Suntech is more of a corporation with global aspirations than a government-coddled or -coerced entity.

In November 2007, Shi publicly expressed plans to expand overseas. Steven Chan, chief strategy officer of Suntech, also mentioned building a U.S. plant in late 2008, saying “We see the US market as on the cusp of enormous growth.”

We may never know whether the solar giant’s decision is motivated by new U.S. federal and local incentives; Beijing pressure on the energy sector to invest overseas; a desire to deflect media inferences and advocacy group campaign arguments that China’s clean tech sector is outstripping her American competitors; or some mix of these factors.

We do know the uniqueness of Suntech’s move. As Rhone Resch, president of the Solar Energy Industries Association, notes:

“A Chinese company opening up a manufacturing facility in the U.S. … [is] quite a reversal from what we have seen in the last couple of years.”

Originally published in SolveClimate.

If you like what you see here, check out China Solar Subsidies Address Economic, not Environmental, Problems.

Jiangqiao

In recent years, bamboo – a rapidly regenerating material – has gained popularity as a sturdy, sustainable alternative to wood flooring. Currently, China produces 200,000 cubic meters annually of bamboo plywood.

However, the history of bamboo’s use as an interior and even exterior material goes back way before sustainable buildings became trendy. Native to much of South and Southwest China, bamboo was first used to make paper, calligraphy brushes, and musical instruments thousands of years ago. For well over a century, it has been crafted into a range of household articles including chairs, baskets, mats, cutlery, and cabinets.

Bamboo – which is actually a grass – can be harvested after only four to six years of growth, much shorter than the 30-60 years required for comparable wood species. Replanting is not necessary, as bamboo regenerates on its own; and the speed at which it does so means it offers excellent erosion control.

Jiangqiao, which began manufacturing the green keyboards last October, has already received orders for 40,000 finished units, and is China’s sole producer of bamboo keyboards.

The company says the product is as strong as its plastic equivalent. Proof that bamboo’s strength surpasses what its flexibility suggests lies in the fact that modern Hong Kong developers prefer bamboo over steel reinforcing rods when constructing some of the world’s tallest skyscrapers.

Jiangqiao faced the same difficulties typical for adapting bamboo for industrial use, including keeping the bamboo keyboard frame from cracking, preventing the bamboo bottom plate from distorting and firmly fashioning the buttons with the main board. However, the company has successfully developed (and patented) its formula, and also developed a bamboo mouse and USB expected to go on the market this spring.

Though Jiangqiao is not the first company to use natural resources in computer accessories, it may be the most eco-friendly. Much of the bamboo used in the keyboards, says the company’s general manager, is leftover scrap from bamboo floorboard manufacturing.

Combining efficiency with aesthetically pleasing design, Jiangqiao is earning a name for itself in innovation and sustainability.

Update (July 20, 2009): Bamboo bicycles!

If you like what you see here, check out Seeing the Forest for the Trees: Shaping Financing to Prevent Deforestation.

This article originally featured in China Dialogue.

Forging a new partnership between the United States and China can help address climate change, but only if regulatory and market shortcomings can be overcome.

A new alignment on energy and the environment between China and the United States sounds like a formula capable of delivering real solutions on climate-change issues. China’s abundant scientific research-and-development resources and manufacturing capacity not only help carbon sink testing and the scaling up of renewable energies become more feasible, but also less costly.

However, the potential cost effectiveness of reducing emissions in China could prove more of a liability than a benefit where the environment is concerned. Systemic regulatory and market shortcomings demonstrate the difficulty of managing and preventing environmental degradation and guaranteeing public health in a developing country context. One example is in the power sector, where in some cases emissions performance has not matched infrastructure upgrades as expected because the use of low-grade coal has gone unmonitored. Does the new US administration have the will to face the prospect that a low-cost approach might be inimical to a low-carbon strategy? Will they ensure careful planning and responsible oversight?

The recent release of a joint Asia Society and Pew Center on Global Climate Change report (see “Road to rapprochement” by Banning Garrett and Jonathan Adams), followed by secretary of state Hillary Clinton’s trip to China, generated considerable US interest in enhancing US-China coordination on energy and the environment.

Grand bilateral collaboration undoubtedly can help reduce the rate of growth of emissions in both countries, and bring much needed efficiency improvements to China’s outdated power production and transmission infrastructure. And a powerful US-China nexus may help break post-Kyoto gridlock at Copenhagen in December. However, a partnership between the world’s largest carbon dioxide emitters is not the “holy grail” for preventing further environmental degradation. Though full of promise, the “China advantage” comes with its own pitfalls.

The China advantage, from the perspective of an emissions mitigation-minded policymaker, is in the development and deployment of clean technologies more cheaply than in the US. This is due to several factors. First, as a 2007 McKinsey report demonstrated, building new, cleaner power plants in places like China is usually cheaper than retrofitting old plants, such as those in the US.

Second, savings come from lower legal costs. Legal considerations that would stall or altogether prevent certain activities in the US are absent in China. For example, attempts to test clean technologies in the US are often riddled with logistical, political and legal obstacles. Nascent and feeble private property laws in China de facto enable the government to exercise eminent domain without significant legal pushback or the same expense as in the US. This makes China a comparatively attractive place to test new technologies, including ambitious clean energy demonstrations of carbon capture and sequestration and an advanced electric grid.

However, the lack of legal barriers can present significant environmental liabilities. For instance, the structure of the Chinese legal system makes it difficult or impossible for individuals to file and succeed in a lawsuit against the state or a private company; and, further, the rules of civil procedure do not permit individuals to file class action lawsuits. In the absence of individual legal recourse, there is little incentive for the private or state actors involved to minimise the risk of pollution associated with such demonstrations.

Finally, China’s manufacturing sector offers a cost-cutting strategy. It is no secret that China’s manufacturing capacity far outstrips that of the US, in terms of cost, across many industries. Optimists often fantasise about the conversion of China’s existing widget factories into production sites of clean energy and energy efficiency equipment. However, the reality is that China’s manufacturing sector offers a cost advantage precisely because environmental costs like treatment of industrial waste are often not factored in to the cost of production. This is due, in part, to lax local government monitoring and enforcement of environmental regulations. Indeed, instances of environmental negligence exist even amongst power producers who have invested considerable capital in efficiency upgrades and cleanup technologies.

“Greener Plants, Greyer Skies?”, a year long study by MIT’s Industrial Performance Center, surveyed 85 power plants (with a total of 299 generating units) across 14 provinces in China. Through a survey of plant managers and specialised personnel, the researchers found that although a sizable share of power plants have installed state-of-the-art equipment, disuse or misuse had compromised the effectiveness of their efforts.

The report overturns the assumption often held by outsiders that the problem lies in lacking or ineffective governance. Rather, the pervasiveness of expensive equipment – almost 80% of the plants had installed “clean coal” SOx scrubbers on at least one of their power generating units – suggests that commercial and political levers are providing the needed pressure for improvements in infrastructure.

The problem, it turned out, was how energy infrastructure was being operated and the types of coal used.

Rising fuel costs and government-set feed-in pricing have strained power producers considerably, prompting them to seek cost-cutting measures. One way plants do this is by substituting cheaper, substandard coal. However, when lower quality coal runs through the generating units, the capacity of cleanup systems is degraded. Likewise, emissions “depend almost entirely on the quality of the coal they use,” said the report’s lead author, Edward Steinfeld, rising when lower quality, high-sulphur coal is burned.

The report also found that smokestack scrubbers and other equipment, which accounted for upwards of one-third of total plant expenses to operate, were idled to save costs.

Substantial improvements in standards are not enough. Moreover, pouring money into Chinese infrastructure improvements, which the US may already be considering, will be a wasted opportunity unless the government can enforce rules on operation and fuel procurement. The ability to monitor plant operations, combined with energy pricing reform (by setting the price of power artificially low, the government actually punishes cleaner, more efficient producers that are less unprofitable), are crucial prerequisites for environmental improvements in China’s power sector.

Looking ahead

Washington has awoken from an eight-year slumber and begun to consider international solutions appropriate to an international problem. The new administration has already demonstrated its intentions to take decisive action on climate policy; namely, by including one of the world’s major stakeholders and emitters. However, we have yet to see whether collaboration on energy and climate will involve appropriate monitoring and regulation in order to ensure responsible, effective environmental solutions.

The nature of the US-China engagement currently under discussion demands the establishment and enforcement of tougher standards more stringent than those governing other bilateral arrangements, such as trade agreements. Already, China has sent the encouraging signal of a commitment to make progress on environmental protection legislation. Since 2007, Beijing has formulated power sector standards on SOx emissions and energy efficiency. In coming years, the government plans to decommission old plants and implement stringent emissions requirements for new plants that come online.

However, as the MIT study demonstrates, these standards will be meaningless without on-the-ground capacity to monitor and evaluate policy outcomes. The US should understand the market conditions and other limitations in China and help to build institutional capacity. Of course, anchoring bilateral activities with better oversight would eliminate some of the cost advantage that makes China an appealing partner on energy and climate collaboration. But the alternative would mean a cost of wholly greater proportions, which neither the environment nor humanity is prepared to bear.

For the past year, 20 experts from seven different government agencies have been investigating the development and implementation of a carbon tax, which has emerged as a preferred mechanism for curbing emissions in China’s energy intensive sectors.

Though the research findings are due out this summer, no details on the size of a tax or date for when it would take effect have been released.

Earlier this year, the government organizations responsible for the study – the China Environmental Culture Promotion Association and the China Institute of Development Strategy Studies – proposed rolling out the carbon tax in select provinces first as a “barometer” for monitoring the carbon intensity of economic activity.

Proponents of the plan favor an incentive structure that would reward producers for investing in cleaner technologies. Under the current market conditions, coal-fired power plant owners reap more profits by using cheaper, lower quality coal, which contributes greater emissions because it’s a less efficient fuel source.

Critics, however, point out that unless the tax rate is set appropriately high, firms would choose to pollute and pay the fee, instead of take steps to curb emissions.

China’s existing Environmental Protection Law, last amended in 1989, sets a maximum penalty of 100,000 yuan ($15,600) on companies that violate regulations, a fee often below the cost of corrective action.

China is not the only battleground for the debate on a carbon tax. Expert opinions on whether a cap-and-trade or carbon tax mechanism is the most effective way to reduce carbon diverge widely. While a cap-and-trade policy is effective at limiting the quantity of emissions allowed, a carbon tax is comparatively easier to enforce.

In China, that may not be the case, however.

Qi Ye, professor of Environmental Policy and Management, and Director of the Public Policy Institute at Tsinghua University favors a cap-and-trade system, which he believes is an “effective market instrument to control pollutant emissions.”

Other experts have stated more explicitly why a market mechanism might work better in China. One, who preferred not to give his name, wrote that

a carbon tax “depends on command-and-control regulation,” which, given often weak monitoring capacity in China, would invite polluters “to rig data about carbon emissions when it comes to fee and tax collections.”

Among carbon tax advocates, there is little consensus on the optimal tax rate or the price on carbon that can balance the cost of mitigation with the benefits from reducing climate-damaging CO2 emissions.

The 2007 UK-published Stern Review, the most comprehensive effort to assign climate change an economic cost, called for a harmonized carbon tax of $350 per ton of carbon (which is equal to $95 per ton of carbon dioxide) in 2015. Many economists have taken issue with this rate, suggesting that one-tenth of that – $35 per ton of carbon or $9.50 per ton of carbon dioxide – is a more appropriate rate. That would translate to roughly $1 tax on each gallon of gas versus 10 cents a gallon.

Already China has taken steps to curb emissions through tax excise, raising the gasoline tax from roughly 3 cents a gallon to nearly 16 cents a gallon on January 1. A highly contentious issue for policy makers concerned with surrounding economic conditions, the tax has had little impact on gas consumption, as an almost simultaneous deregulation of gas prices lowered pump prices by approximately the amount per gallon of the new tax.

Though officials have not stated what the carbon tax rate would be, or how revenues would be spent, WWF Director of Global Climate Change Solutions Yang Fuqiang estimates companies will face a carbon tax of at least 44 yuan ($6.50) per short ton of carbon dioxide emitted.

While less than the minimum $12 per ton of carbon dioxide that economists generally concur is needed to curb emissions, the rate is not an altogether paltry sum.

As a point of comparison, the final clearing price for the more than 30 million permits auctioned in last month’s Northeastern states’ Regional Greenhouse Gas Initiative was $3.51 per short ton of CO2 emissions. The latest auction price is up 13 cents from last December’s auction and 44 cents from the first auction in September 2008.

Dan Rosenblum, co-founder of Carbon Tax Center, a U.S.-based non-profit organization that promotes carbon tax, said that while a higher tax rate harmonized across countries would be preferable, the proposed rate is a workable framework for curbing emissions.

Whether the money raised “is put to productive use,” and goes towards emissions reduction activities, is ultimately more important than how high the rate is, says Rosenblum. He adds that while the tax rate “will have to be ramped up” eventually, there are presently “legitimate issues with regard to what we can expect a developing country to commit to.”

So, while a globally harmonized price of carbon will be important in the years to come, by enacting a carbon tax that surpasses the prevailing, market-determined U.S. price of carbon, China would be taking a critical first step to encourage emissions mitigation.

The announcement was made just a couple weeks after Bloomberg and President Clinton announced a $20 million efficiency overhaul of the Empire State Building, and the Mayor called for extensive urban wind power deployment. Two years ago, the Mayor launched PlaNYC, an ambitious, multi-sector policy initiative aimed at bringing greater sustainability to NYC, on Earth Day.

Plan to Include Energy Code, Require Energy Audits & Efficiency Upgrades

Under the new plan, each of the 22,000 buildings in the city with more than 50,000 square feet of floor space would be required to conduct energy audits every 10 years, say city officials. The package also includes a first ever energy code for New York, that would require equipment upgrades, in all of the city’s one million structures, to comply with the latest standards for energy efficiency. The current state code does not prohibit buildings from using older, less efficient equipment in retrofits.

The laws and initiatives in the works, set to take effect by 2013, aim to in reduce the city’s total carbon-dioxide emissions by around 3 million tons a year, helping New York meet the Regional Greenhouse Gas Initiative target of 10% reduction in emissions from the power sector by 2018.

Green Job Creation

Bloomberg and others believe that requiring approximately 2,200 building audits and upgrade projects per year for a decade would stimulate $2.9 billion in private investment in building improvements by 2022 and generate 2,000 new jobs. Moreover, city officials estimate investing in energy efficiency improvements will pay for itself, and save property owners roughly $750 million a year in energy costs.

Not everyone agrees.

Groups representing building owners and managers have already voiced opposition for parts of the plan.

Building Owners and Managers Association representatives have expressed support for the energy code, lighting improvements and steps requiring energy “benchmarking”, but reject the biggest component of the plan: required energy audits and mandatory upgrades.

“We believe that the building prioritization of retrofitting is best left in the hands of the building owner/manager, not outside consultants who seek to bundle projects and lead to higher costs for our members,” said Angelo J. Grima, president of BOMA’s New York chapter, in a letter sent to the Mayor’s office, who is concerned that requiring upgrades would lead to inflated prices and misaligned solutions.

City officials stand convinced that the program would yield more savings – financially and environmentally – than costs. To speed up the process for reaping benefits, the plan proposes to use $16 million in federal stimulus money to set up a revolving-loan fund to help property owners pay for upfront energy improvement costs. Existing New York State Energy Research and Development Authority funding will also remain available for building energy efficiency improvments.

Also, the plan includes a provision sparing unwise and costly improvements. Upgrades will be mandatory only if energy audits determine the presence of low-hanging fruit, or show that the costs of improvement could be zeroed out through energy bill savings within a five year period.

Almost Half NYC Energy Demand from Buildings

New York buildings not only account for 80% of the city’s emissions (twice the national percentage of building-generated emissions), but comprise 72% of energy use. Big buildings consume almost haf of the city’s total energy demand, evidence of the importance of reducing energy consumption in NYC buildings.

Facing increasing pressure to both curb building-related emissions and reign in energy demand that is growing faster than outdated infrastructure can supply, the city plan offers a sensible approach.

If you like what you see here, check out Clinton Climate Initiative to Pay $20m for Empire State Building Efficiency Retrofit.